Can IT Outsourcing be a greener way to do business?

outsourcing

The global IT Outsourcing market is worth in excess of $250 billion and rising each year by 6.8% CAGR, demonstrating the rise in demand for Enterprises, the Public Sector & SME’s to outsource their IT requirements year on year. Companies elect to outsource for a number of reasons – to cut costs, to access cheaper resources and to achieve economies of scale. All of which are focused solely on the need to increase profits by decreasing operating expenses, it’s all about improving the bottom line.

Now that the bottom line has evolved into the triple bottom line, more organisations are beginning to realise the importance of the planet and people have in generating and sustaining profits. “But having a green focus will cost my company money” is the myth I often hear from ICT providers, Enterprises, Telecommunication companies and Managed Service Providers – but a myth this is.

This article will explore how organisations may be losing out on opportunities with potential partners & customers by being profit driven with no sustainability strategy. Business objectives in any industry are simple to understand – generate profits. However when it comes to IT Outsourcing, it’s now time to go green or go home.

Carbon Footprint, Energy Efficiency & Consumption Reduction

Whether it’s IT Networking, Mobile Apps or Cybersecurity, when IT functions are outsourced, the impact on an Organisation’s carbon footprint is positive. Take for example Company A, they have offices in over 50 countries and a central IT Department in country X. Now if Company A have an issue with their IT Network or an IT Security issue then they need to send an in-house Network Engineer or IT Security Expert to country X, Y and Z. The journey of the in-house employee will proceed by driving to the airport, flying to their international destination, then driving to the office in country X – already the carbon dioxide emissions emitted has damaged the atmosphere.

However if Company A decided to Outsource rather than send in-house staff on an around-the-world trip, significant reductions would be made in carbon emissions. Less petrol/diesel would be used as no/shorter car journeys would be necessary, no jet fuel consumed, no oil to maintain vehicles and no additional electricity – Same outcome but this time with a reduction in carbon emissions and at a fraction of the overall cost – sustainable savings.

Regulatory & Market Demand

Directors with their fat bonuses and Shareholders with their fat dividends shouldn’t be the only stakeholders to influence business decisions – listening to the demands of your customers and potential partners are just as important.

Customers now actively seek companies with strong green credentials and base their buying decisions on the strength of their green/sustainable credentials. So many products and services are homogenised that often the only point of difference between companies is to embrace sustainability – it’s no longer tree huggers and revolutionists demanding protection for the environment, it’s YOUR customers.

According to the Brown-Wilson Group’s Black Book of Outsourcing, 21% of EU & USA Organisations outsourcing specifies that green elements must be included in contracts, a figure which is set to double in the next 12 months. In the UK Public Sector, environmental regulations in procurement decisions stipulate that sustainability must be considered. Therefore public sector contracts are no longer driven by the cheapest prices, but the 3 P’s – Profit, People & the Planet.

Climate Change Agreements (CCA) allows energy intensive industries such as Data Centres to reduce their energy consumption for a reduction in levies. Data Centres have now reached a significant size and maturity that as an Industry they contribute to lowering national carbon emissions. With an increasing amount of organisations outsourcing their Data Centre needs, there is a direct correlation between IT Outsourcing & improving sustainability.

Service Level Agreements (SLA’s) is another area in IT Outsourcing whereby green-focused KPI’s are part of the contract terms. Mileage, emission reductions and sustainable materials are all part of modern-day “Green Contracts” and if your company isn’t prepared then it’s time to go green or go home.

Going green is no longer about box ticking and greenwashing, your end-customers demand it, your partners demand it and governments & legislation demand it. If your customers demanded a new product, one would be invented so when they demand a sustainably driven company, give them it. Do you think having a sustainability strategy in the world of IT helps or hinders IT Outsourcing?

Locally sourced Cisco Network Engineers represented by connecting cities

3 Reasons to outsource your requirements for Cisco Engineers

Locally sourced Cisco Network Engineers represented by connecting cities

With a market cap of $119 billion, 2014 sales of $48 billion and ranked number 12 in the world’s most valuable Brands, Cisco are the industry leaders in IT Networking equipment. The likelihood is that readers of this article will be working with or have worked with Cisco Network Systems. Therefore if your company is working with a Cisco Network System then you’ve faced the dilemma of choosing between outsourcing the need for Cisco Support or employing in-house Engineers.

As an SME, Enterprise or a non-ICT related company with a Cisco IT/Phone system, then you need to think about the level of Cisco Engineers you need to employ for your business. Whereas Managed Service Providers, Professional Services & Cisco Channel Partners need to think about the level of Cisco Engineers your clients require. Either way, outsourcing can provide your business with the specialist Cisco skills you need and at a fraction of the cost and risk of employing Cisco Engineers in-house.

1) Lower Operational Costs

In the UK Cisco Engineers command high salaries and rightfully so, they’ve studied and trained hard to achieve their status. Current 2015 average salaries for Cisco Engineers in the UK are:

CCNA    £40,500

CCNP     £47,500

CCIE       £60,000

Your Operational costs don’t end there, other costs associated with in-house Cisco Engineers are:

  • Holidays & Sickness
  • Salary benefits – Bonus, Shares, Pension, Health Care & Annual Pay Increase
  • Additional Benefits – Company Car, Petrol Allowance, Laptop, Mobile Phone
  • Maternity/Paternity Pay
  • Staff Training
  • National Insurance & Tax Contributions
  • Portion of running costs – office, furniture, equipment, admin costs & consumables
  • Cost of Employment – In-House costs or Recruitment Agency

Accumulating the additional costs of employing in-house, a CCNA salary can be well in excess of £50,000 per year or around £23 per hour. Compare this to the average hourly rate of a CCNA which is currently £18 per hour resulting in savings of 27.8% when outsourcing against employing in-house. Your wallet, your choice.

(Visit http://www.accountingservicesforbusiness.co.uk/calculators1/true-cost-of-an-employee/ to calculate the annual cost of your employees and http://www.itjobswatch.co.uk/contracts/uk/ccna.do for CCNA rates)

2) Access to Skills & Knowledge

The Internet of Things (IoT), mobile devices, smart cities, big data and the human fascination and dependency on technology facilitate the need for Cisco Engineers to specialise in certain tracks. You might have an in-house CCNA, or CCIE, but do they specialise in Unified Communications, Security, Wireless, VoIP, R&S and Data Centre? How many hours and years of training would be required to have access to such a varied and multi-skilled workforce in-house? How much would this cost your company?

Having access to the skills and knowledge of certified Cisco Engineers is the most significant reason to consider outsourcing your need for Cisco Support. Quality of service is often cited as a reason not to outsource, however if you focus on creating strict SLA’s and define a clear scope of work between your outsourcing partner, then you can achieve exemplary quality of service for your end customers.

3) Risk

If you outsource your Cisco Support then you simply pay for what you need and use. Replace outsourcing with employing the multitude of Cisco Engineers in-house and you’ll need to ensure you have enough work for the Engineers every day, 52 weeks of the year.

How much time and money do you think line managers and HR departments waste on frivolous staff issues? “Can I have a day off for the dentist?”, “I need to take my dog to the vet” and so on. Employees also are savvier with their knowledge of employment legislation and their rights – holidays, sick pay, pensions, maternity leave and more heavyweight issues such as unfair dismissal and equal rights. It’s not only your balance sheet at risk; it’s your Brand, reputation and credibility in your industry. Taking risks is part of business, but if you can avoid being exposed to such substantial risks then why wouldn’t you outsource.

Do you employ in-house or outsource and why? However opinionated you may be, please feel free to leave your comments.